The U.S. economy cannot digest the austerity measures forced upon it by Congress, warned a top economist at Moody’s Analytics.
Chief Economist Mark Zandi told the House Joint Economic Committee on Thursday that he believed the spending cuts and tax increases under discussion in the near term were overdone.
“If I were king for the day I would smooth that in over a longer period of time to allow the private economy to digest that fiscal drag,” Zandi said.
Zandi said the economy remained lackluster due to persistently high unemployment, which he blamed in large part on austerity measures already in place.
He said deficit reduction was important, but he cautioned against focusing on reducing debt at the expense of the economy.
“Clearly we needed to bring down the deficits,” Zandi said. “We need to get the debt down to stabilize the debt-to-GDP ratio, but we’re doing that very quickly and taking a big chance in the process.”